Why is Real Estate a safe Financial Investment ?
All over the world, real estate is considered one of the safest sectors to invest in. In India, it is the second largest employer after agriculture – and is slated to grow at 30% over the next decade. So regardless of temporary setbacks, it’s still the safest investment option – and will continue to grow in the long term.
According to an estimate by the Ministry of Housing and Urban Affairs (MoHUA), India’s real estate sector is valued at USD 200-billion market in 2021 and will hit USD 1 trillion by 2030. Moreover, the real estate sector is the second largest employer after agriculture in India and contributes 7-8 percent to the Gross Domestic Product (GDP) growth of India.
Why You Should Invest in Real Estate
From time immemorial, owning a home has been associated with status, wealth and credibility. Along with gold, it was the safest way of securing one’s wealth. As we stepped into the modern era, a lot of other investment options developed. Options like stocks, bonds, fixed deposits, mutual funds digital or crypto currency gave investors multiple options of parking their money. But out of all of these, a piece of real estate still remains one of the most secure and beneficiary avenues for a long term, profitable form of investment.
Real estate is a necessity since everyone needs a place to reside, and the investment in real estate solves this problem and secures the future. The Indian real estate market is thriving and has become a part of many successful investment portfolios because of its high return on investment (ROI) value. As per a report, 77% of the total assets of an average Indian household is real estate. Therefore, if you want to grow your wealth, you too should consider a real estate investment in India.
It is a safe investment option
When it comes to real estate, the sector has been witnessing a growth in the last few years because of the implementation of RERA, reduced home loan interest rates, etc. On the other hand, the interest rates on savings accounts in banks are considerably low, especially when compared to the rising inflation.
You can park your surplus funds by investing in a property. It is less susceptible to frequent fluctuations and there are minimal chances of theft. Furthermore, the longer pricing cycle in real estate as compared to other assets with shorter pricing cycles means that real estate prices are more predictable and steadier.
Tax Benefits
Tax deductions on Real Estate can offset income and reduce overall taxes. There is no self-employment tax on rental income. At the same time, the government offers tax breaks for property depreciation, insurance, maintenance and repair expenses, legal fees and even interest paid on a mortgage. Real estate investors get lower tax rates for their long-term investments. Reasonable costs of owning, operating, and managing property are easily deductible.
Home loans contribute to tax savings. If you are a first-time homebuyer, you can save up to ₹1.5 lakh on the principal amount under Section 80C, up to ₹2 lakh on the interest payable under Section 24. These tax savings can help you lower your investment cost and make the investment a lot more affordable.
Appreciation of Value
Real estate values always increase over time. With a good investment, one can turn an enormous profit when it’s time to sell. Rents also tend to increase with time, leading to higher cash flow. It is historically evident the longer you hold onto your real estate, the more money you will make. The housing market always recovers from bubbles and crises that cause home appreciation to slip. Following even the most uncertain times, prices always return to normal, and appreciation is back on track.
Tangible Asset
Property being a tangible asset can be leveraged to capitalize on numerous revenue streams while enjoying capital appreciation. The high tangible asset value ensures everlasting security as there will always be value in Real Estate, unlike other investments such as stocks with low or no tangible value.
It is a rapidly growing sector
The Indian real estate market is growing at a fast pace. The market for real estate is expected to grow from ₹12,000 crores in 2019 to ₹65,000 crores in 2040 and contribute to almost 13% of the country’s GDP by 2025.
With residential and commercial spaces coming up in several cities around the country, including tier 2 and tier 3 cities, you can benefit from exemption on long-term capital gains tax on investment in a residential property under Sections 54 and 54F.
To sum it up, the Indian Real Estate market is booming and being a part of its growth can shower favorable returns in the future. Real estate is easy to purchase, convenient to finance, gives tax advantages, improves your lifestyle and is devoid of any insurmountable financial barriers. Hence, Real Estate, even today, remains one of the most advantageous investment options.
